Minister, welcome. It is nice to see you again. Would you mind introducing your colleague who is with you.

(Peter Hain) Nick Baird is head of our European Union Department (Internal). He has to bail me out if I get into trouble!

I am sure you are not going to get into trouble, Minister, and we look forward to this session. I can remember when you were here for the first time when we said we looked forward to further meetings and this will be one of many we are going to have in the next three months or so, and later on we have the Standards Committee on the convention which will be interesting as well. On 10 July, the Commission put forward radical proposals to reform the Common Agricultural Policy so that the link between direct subsidies and production would be cut and payments would be gradually reduced by 20 per cent, allowing the money saved to be used for the broader rural development measures. The Poles made clear to us during our visit the importance they attach to parity of treatment in direct aid to farmers. If the Member States do not accept the Commission's proposals for reforming the CAP, will this undermine their stance on direct aid in the accession negotiations? What do you envisage as the outcome of the negotiations on direct aid and agricultural quotas?

(Peter Hain) First of all, thank you for inviting me again; I genuinely welcome the opportunity to have these exchanges and also to read of your reports and no doubt we will come to that later. The first thing to just emphasise is that the budget for CAP is not going to increase; there has been a ceiling put on that. That under pressure of enlargement is going to require huge reforms in any case, but it is important too that there are no first or second class citizens or Member States within the European Union in respect of agriculture or any other matter. So, even though there will inevitably be transitional measures as the Commission has in its negotiations on the agriculture chapter made clear, people will not come in on a level playing field with existing Member States on day one. Nevertheless, where it ends up must be on a level playing field which means a reduction in direct payment assuming the system remains the same, and we want to see it radically reformed, and then the Poles will get the same according to the criteria as British farmers do and French farmers do.

What do you see as the outcome of the negotiations on direct aid and agricultural quotas?

(Peter Hain) There is quite a long way to go on all of this, but we want to see a situation where direct payments supporting production, often wastefully and artificially, are replaced by development assistance to support the rural economy, rural enterprise including agriculture, diversification, value added products and so on, so that Europe's agriculture sector becomes much more modern and competitive, and that is the way we would want to see it go. So, we would like to see direct payments in the current form replaced by that support mechanism which would create a much more diverse form of rural support and actually create a more modern rural and sustainable rural economy in the process.

Is there a risk of creating a new block of countries with a vested interest in blocking CAP reform?

(Peter Hain) That block expressed itself recently in that we, the Germans, the Swedes and the Dutch have been most clear in wanting CAP reform, but other countries, particularly France and Spain, want to retain the status quo. In my view, the status quo is not tenable with enlargement and it is certainly not desirable. So, there will be reform and the Commission's proposals were very encouraging in promoting a shift towards environmental and rural support rather than production, as I said earlier, and also a focus on quality food. A very important factor in all of this which is often neglected is opening up markets to developing countries. If we are serious about poor countries in Africa, for example, being able to generate strong economies and create strong economies which make them less dependent on ourselves for aid and help them to escape from poverty, then we need to have a Europe which is not a fortressed Europe against poor countries but one that lifts its tariffs and its agricultural barriers including massive bloated subsidies.

Is there not a problem with this perception or certainly a perception which might be a weaker one because we saw clear evidence when we visited Poland that there was an impasse and strong objections to the Commission's offer of 25 per cent by some of the political parties? Do you not see that there is a risk, if this impasse is not solved pretty quickly, of influencing people's support backing with the candidate countries indeed for joining the European Union?

(Peter Hain) There are all sorts of risks and that is certainly one of them. Europe has a habit of solving these problems one way or another and I think that the pressures and the imperators for reform are now so great that even those with, as you say, Chairman, a vested interest in maintaining the status quo are going to have to accept a combination of enlargement (because the CAP will not bear the weight of enlargement in its current form) on the one hand and pressure for reform on the other. For budgetary reasons, I think that reform will take place. Whether it is entirely on our agenda remains to be negotiated.

Mr Connarty

George Soros was in the House at the beginning of last week and was as critical of the European Union's CAP as he was of the United States's and its impact on the development of the poorer countries of the world.

(Peter Hain) I am happy to agree with Mr Soros.

I did actually find, for the first time since he stole £1 million, the plummet of the pound acceptable! He is not going to get his £1 million! Twenty per cent disappointed a number of people including myself. Do you think that 20 per cent reduction in direct payment, which is what they are talking about and what the Commission proposed, is enough? Should we not just stick at that which means that we would freeze the CAP at a slightly lower level but with still the same fundamental flaw, that they are still getting direct subsidy for over-production?

(Peter Hain) It is not sufficient but it is important that the Commission has actually at least faced up to the fact that it has to be reduced. Of course, overall CAP support has already fallen as a proportion of the total EU budget from 80 per cent to under 50 per cent, so we are going in the right direction. I just see the Commission's proposals as an important first step, a welcome opening shot at the negotiations from which we must build.

Jim Dobbin

I have a two-pronged question. Are there other issues which may remain to be settled after the European Council in October and with which candidate countries? The second part of my question is, do you expect any candidate countries to complete negotiations ahead of any of the others especially pertaining to agriculture?

(Peter Hain) There are a number of candidate countries - I am thinking of Cyprus and Slovenia - where, on the agricultural chapter, there is really not a lot of problem in them completing their negotiations, almost whatever happens, save for equity on the agricultural support chapter. Remember that 95 per cent of the agricultural support chapter has already been agreed and negotiated and is there. It is the five per cent on the support mechanism payments where there is a difficulty. The European Council, in its informal moment, will have to resolve this. We were very determined before Seville that we did not have a situation, as a number of countries including France wanted, whereby effectively the outcome of the medium term reviews draft proposals, which is what you have just had from the Commission, were preempted by the decision the Council took on agricultural support in the chapter. Specifically, that it committed itself to direct payments as a number of countries with vested interests wanted us to do. We succeeded in postponing that decision until October or early November or whenever the informal Council might actually take place, so I think that puts us in a better position to resolve this issue.

Mr Connarty

Turning to the topic of enlargement and administrative and additional capacity, having visited a number of the African countries both with the Committee and independently and having spoken to people from the private sector, often what we see is that there is institutionalised corruption in the economies and in the administration of the countries that are seeking to come into the EU. So, when we are talking about improving administrative and judicial capacity, we are talking about bringing them into a state of being open and non-corrupt in both economic behaviour and in administrative behaviour in public services. The Seville conclusions stress that the candidate countries must bring their administrative and judicial capacity "up to the required level". What do you believe "the required level" should be and how will a continued lack of capacity affect the Council's attitude to a candidacy? I suppose my sub-question to that is, will we accept countries where it is still obvious that they still have institutionalised corruption in their economy and in their administration?

(Peter Hain) They have to comply with the acquis and in negotiating all the different 30 chapters. That has been agreed to and the reforms have been put in place and implemented. So, when the Commission reports in the informal council in October, as it is currently planned, they will make a recommendation as to which countries are virtually there. Obviously corruption along with judicial reform and a number of other key criteria are part of that. It is clearly obvious that those countries that were in the Soviet Empire until 12 years ago have a long way to go to reform themselves especially in respect of corruption. So, I think that this has to be an absolutely high standard that we have to adhere to.

It has been said by some people who have studied the problem that it will take a generation. We are talking about access to these countries coming in during 2004. Are we really prepared for a generation to work out their institutionalised corruption in the system?

(Peter Hain) I think it is already being worked out of the system and that we just have to keep at it. I think the prize for all of us in terms of increased stability, increased prosperity, greater security from terrorism or hebo- trafficking or drugs trafficking or organised crime is completing enlargement on time. That is the supreme price. That is not to say that the performance of all the 10 candidates due to come in will not be uneven in different areas, whether it is in economic reform, corruption, agricultural modernisation or whatever it might be. You cannot expect countries to just transform themselves overnight. When Spain, Greece and Ireland came in, they came in as very poor countries. They did not become rich immediately at EU standards but they now are. I think we can expect that kind of progress to happen. Corruption happens in all countries, even from time to time in ours though thankfully it is very limited now. So, I just think that we have to keep a beady eye on it, but we must not make a total obstacle. Provided all these countries satisfy the acquis and provided they immediately negotiate the criteria, they should be allowed in but, as I say, with a beady eye kept on them.

Mr Hendrick

Chairman, in a letter dated 3 July, the Minister for Europe said that the gap between the Greeks and the Turks had narrowed substantially and the Seville Council had asked the Greek presidency (because of the Danish defence opt-out) to continue the work with the Secretary General/High Representative Javier Solana. This was likely to mean that bilateral discussion between the Greeks and the Turks would take place. Minister, to what extent might improved relations between Greece and Turkey affect the outcome of the Cyprus talks and is there a realistic possibility of a comprehensive settlement before December?

(Peter Hain) We are certainly hoping that there is. I have visited Cyprus and was due to visit Turkey next week but that was impossible to secure for various reasons, and of course there is a certain impasse there governmentally. However, it is really, really important that we do get a settlement and that a united island is admitted into the European Union as we want. We have been working on an almost day-to-day basis through our special representative, Lord Hannay, and, at ministerial level, the Foreign Secretary and I have sought to engage at quite close quarters to try and exert what influence we can to promote a settlement because there is no doubt that although we will stand by the Helsinki Agreement that the Republic of Cyprus will be admitted if it satisfies all the normal accession negotiating requirements, it is not going to be easy but it is by a million miles a better solution to admit a united island. So, that is crucial to focus on.

To follow up, do you expect the EU to take over from NATO in the former Yugoslavian Republic of Macedonia or might it take longer for relations between Greece and Turkey to improve sufficiently to allow the question of EU access to NATO assets to be settled?

(Peter Hain) The European Union cannot take over NATO's peace-keeping role in Macedonia if there is continued disagreement between Greece and Turkey. That is simply the case. The European Union would need access to NATO planning if it is to take over and any operation would need to be closely involved in NATO presence in the region, particularly for communications and logistics and air space. So, the short answer is, no. If that stand-off continues, then it would be very important that we achieve the very desirable objective of the EU taking over with NATO's full agreement and indeed request. At the present time, that is not going to be possible.

Chairman

What is the view of the Foreign Office regarding the difficulties in Turkey at present? Do we see that as a hindrance or helpful to the negotiations that have been going on in Cyprus at present?

(Peter Hain) No, it is not helpful at all. If there is a sense of impasse in Ankara, that allows those both in Cyprus on the Turkish side and in Turkey itself to create difficulties in terms of progress. What we want is a strong Turkish Government that sees that it is in its own best interests and in the interests of Turkish Cypriots to settle this before the Copenhagen Summit in December. I have said both to the Turkish Cypriot leader, Mr Denktash, when I was in Nicosia some months ago, in April I think, and also to the Deputy Prime Minister of the Turkish Government, Mr Yilmaz, that Turkey is in its most powerful position in terms of achieving a settlement of the Cyprus question between now and the Copenhagen Summit. After the Copenhagen Summit, it is in a much weaker position and I think there is a dawning recognition of that on the Turkish side now and they really ought to roll up their sleeves much more effectively and negotiate with President Clerides and bring every pressure to bear to get a solution. Obviously we expect the Greek Cypriots to be willing to compromise as well because this will take compromising on both sides.

Mr Connarty

Turning to the EU/Iran trade and co-operation agreement, there is the single largest Early Day Motion going round this moment in the House on one side by 380 members expressing serious concern at the behaviour of the present administration in its second term in Iran with accusations of 1300 people being given the death penalty and 13 stonings of women for breaches of Assyrian law and with half of the newspapers in the country being closed down and, although it is not referred to in the Seville conclusions, the EU are entering a stage of what is of political significance and there is a deep concern on the part of many people who would like to see Iran come into the modern world. Given the complex political circumstances in Iran, what grounds do you think the Council has for believing it can contribute to a process of political and economic reform when it is clear to those people who have been watching that there is no difference between the present government and the previous governments in Iran?

(Peter Hain) I take the view that our Government's policy of engagement with Iran and the European Union's policy of engagement with the Kotomy(?) regime is absolutely vital. There is and has been now for a number of years - you referred to the Kotomy(?) regime's second term - a balance of power, a struggle going on in Iran between the reactionaries, mostly identified around the mullahs and so on, and the reformers in the government. Yes, Iran is very far from meeting the complete democratic criteria but there have been big advances in terms of freedom of expression, reforms and so on. So, I think the European Union's objective must be to support that reform process by a process of association and through the ways that you have indicated, trade agreements, association agreements and other forms of dialogue in order that we encourage reform. If we pull up the drawbridge and say "no", then I think that would encourage the forces of reaction who are actually opposed to the engagement of the West and I think we should put ourselves and Europe has put itself so far on the side of the reform process, although going into it with its eyes wide open, and recognising that there are lots of abuses of power, not all of which can be attributed to the reactionaries who have largely got control of the judicial system there which is the problem. The Government does not have that influence. That needs to be seen in that context. Chairman, I do not know which EDM is being referred to, but there has been a very vociferous lobby by one faction in Iranian society which has pretty dubious links to the Baghdad regime and other pretty sinister forces. I do know whether it is the one that has been lobbying for this particular Early Day Motion or not, but I think sometimes we need to be very careful as to which EDMs we are signing, however good they may look on paper.

The EDM has been circulated by fax by Lord Corbett and I have actually written to the Iranian Government to ask for an explanation of the accused ...

(Peter Hain) I used to sign a lot of EDMs myself and I am in favour of that practice. I am sure if it has been circulated by Lord Corbett it does not have that taint, but there is an organised lobby around the Commons at the moment and I think people should look at it very carefully and look at the origins of the group; it has pretty dubious connections.

Roger Casale

I think there is an issue about how to make the economic might of the European Union more of a force for good in the world, whether it is by stick of trade sanctions or by the carrot of holding out particular association agreements or by other means. I think many people would argue that the European Union could punch more of its weight, particularly in relation to economic matters. That applies to the context of the discussion we have just had about Iran. Some would say that it also applies to the Middle East, both for example through the aid European Union provides to the Palestinian authority and assistance there but also in the context of the call for trade sanctions against Israel. What is your view about that, Minister? How much clout does the European Union have in the world as a result of deploying its economic might and how can that be increased in the future?

(Peter Hain) Obviously it has a considerable influence as we saw at Doha in negotiating the trade round where Pascal Lamy was absolutely pivotal in getting progress towards a much more progressive trading system which would favour rather than penalise and exploit the poor world. That still has to be carried through. So, there is that area. The European Union, especially after enlargement, is the largest single market in the modern world and the most powerful and richest economic bloc. In respect of trade associations of a positive kind, North African countries, Euromed agreements and so on on the one hand or sanctions on the other, I just think that we have to look at its merits. I do not see any virtue in proceeding down the road of sanctions because I think what that would do, although there were some demands for it from some Member States, would be to simply deprive the European Union of any influence. In fact, under Javier Solana, the high representative, Europe has quite a purchase in the Middle East which it has never had before.

Chairman

I wonder if we could move on to the question of the Convention. Can you give us your view on the Convention's progress so far and the prospect of a successful conclusion.

(Peter Hain) We have just completed the listening phase of the Convention as the Convention President, Giscard D'Estaing, described it, and we had the youth convention last week, so we are now in the more analytical phase where we have working groups - I represent the Government on the subsidiarity working group - and the existing batch of six working groups are due to report in the early autumn. A second stream of four working groups will open up in early September or in September at any rate and are due to report within a couple of months. So, the drafting phase is expected to start really around the end of the year. So far, I think a lot of the wind that has been developing from the Convention floor is blowing in an encouraging direction, which is in a British direction, if I can put it that way. So, I am quite encouraged so far but there is a long and heavy way to go.

What role are you seeking to play in the Convention and who are you co-operating with mostly?

(Peter Hain) It depends on which issue we are thinking about. I am seeking to represent the Government directly and negotiate a consensus on some of our key concerns: council reform - you might want to go into this in some detail and I would be happy to do so - the charter of rights where we are very concerned about pressure to incorporate it wholesale and unamended; subsidiarity and common foreign security policy where the intervention I made last Thursday provoked probably the most heated debate of the Convention so far and a real exchange of strong views with myself arguing, as it were, an inter-governmentalist position on CFSP and others saying that it should all be communitised and handed over to the Commission. Regarding alliance, I would say that we are probably most in tune with France, Italy, Sweden and Spain and to some extent with Denmark and with most of the cabinet countries who, having recently escaped from the Soviet tyranny, have enjoyed their own independence and freedom over the last 10 to 12 years and are not about to give it up to some fantasy of a Brussels superstate any more than we are. So, there are fruitful allegiances and alliances being built there.

What are the Government doing to simulate public debate on the work of the Convention?

(Peter Hain) It is quite difficult to do that. I am in the process of a whole series of tours between the nations and regions of Britain. I have visited Scotland, Wales, Northern Ireland, South Yorkshire, the West Midlands and the North-West in the last nine months or so and, in the most recent ones since the convention has been sitting, I have actually been talking about the Convention in some detail. It is not an easy subject for people to get into. It becomes very anoraky very quickly. Mind you, your Committee, Mr Chairman, is well versed with the anoraky nature of the European ...

I take that as a compliment!

(Peter Hain) It is a supreme compliment; that is why I always try and prepare diligently for your sittings. We have also tried to get a wide range of views through regional visits, as I say, seminars, radio phone-ins and interviews, but the problem is that, if you called a meeting on a wet night in Dudley on the future of Europe, I guess the turnout would be quite low!

Roger Casale

The French National Assembly held a two day convention (for) Civic Society last year in preparation for the Convention. I wonder if the Minister would say if he thinks such an idea could work in the UK and whether that would have Government support if something similar were tried here.

(Peter Hain) I think it has been important that Parliament's representatives on the Convention have been able to report back to Parliament through this new mechanism. I have been discussing with local governments regarding holding a conference with local government representatives at some time before the end of the year to discuss the indications of the future of Europe debate for local authorities. Civic Society, as you know, had its own day and a bit at the end of last month in the Convention and there were many British representatives there. The Foreign Office is due to open up a website which will promote interaction and debate for members of the public. I would look at all ideas, providing they were practical, in a sympathetic way.

Mr Cash

With regard to National Parliaments, I note that in the Laeken Declaration, rather patronisingly, it says that a second question which also relates to democratic legitimacy involves the role of National Parliaments. We all know that there are a lot of people at the Convention who, quite frankly, put much more emphasis on the European Parliament and think the National Parliaments are really rather an irrelevant and obsolete institution. However, those of us who know the truth know that that is exactly the opposite way round and we have produced an excellent report, which I hope you agree with, regarding the importance of enhancing the role of National Parliaments. The question that I am particularly concerned about therefore is in relation to the so-called principle of subsidiarity and I would be grateful if you would give me one example, even one example, of any subsidiarity that has been applied at any point since 1992 in order to give me one indication of one thing that has been done in that context. What role do you think the National Parliament should have in enforcing National Parliaments? Has the Government abandoned support for a second chamber? Have the Government given any thought as to whether verification of compliance with subsidiarity should take place at the beginning or the end of the legislative process? What do you think about our Committee's suggestion in that excellent report that National Parliament should refer items of legislation to a subsidiary 'watchdog' or some other body for examination of compliance with the principle of subsidiarity? I have to say that I would disagree with the idea that we should refer it to a watchdog simply on the grounds that I do not believe subsidiarity is actually prospectively going to happen as Mr Lamassoure said himself. Lastly, do the Government have any view as to what additional mechanisms of procedures should be adopted to enhance the role and influence the National Parliaments at European level? In other words, in essence, do you believe that National Parliaments are the key to the future of democracy in the European Union as we clearly state in our excellent report -?

(Peter Hain) One proposal of which you do not agree with.

No, simply because I do not see any evidence of subsidiarity. Let us not worry about theological discussions. The real question is, do you really believe that National Parliaments are the key to this because, after all, we do actually have occasions such as this but, in addition to that, all our proceedings are reported in Hansard and we actually have a genuine democratic process, despite the whipping system which needs to be reformed. Do you not agree that really we do represent an objective to which perhaps other nations might aspire in this convention?

(Peter Hain) Yes, I do. I agree almost entirely with what you say and I agree that the Committee's report was an excellent report and I am not courting, as it were, sympathy by saying that. I genuinely think that some of the ideas you presented were absolutely in line with our own thinking and were very helpful, not least in focusing on the importance of subsidiarity and on the fact that national parliamentarians really are the key body to police subsidiarity. It has not been effectively policed until now, I agree with that. It is vital that we reconnect the European Union institutions with the citizens of Europe and that is one crucial way in which to do it through national parliamentarians. The idea of a second chamber as a vehicle comprising representatives of National Parliaments was one idea suggested by the Prime Minister two years ago. The important principle he was saying is that national parliamentarians should police subsidiarity, so he is in agreement with you and happily with me on that. I think that thinking has evolved since then and the ideas that the Committee put forward in this respect are very close to the Government's thinking and actually, when we have been putting that idea forward, we have met quite a lot of support amongst other members of the working group on subsidiarity that I sit on. The other way in which accountability in the institutions of the citizen is best achieved is through Member States, through the Council of Ministers, and I was interested in the proposals you put forward on that. In respect of National Parliaments, that is the second or first, whichever way you look at it, form of accountability which I think it is imperative to ensure we secure.

The problem - and that is why I produced a sort of minority report on the Committee's recommendations having agreed with 85/90 per cent of it - is not whether or not you think it is a good idea, the question is what you do about it having regard to the construction of treaties and the realities of institution arrangements. It is actually very difficult if not impossible to achieve these principles, which we all applaud, about subsidiarity and -

(Peter Hain) No, it is.

If I may just finish, unless you actually give to the National Parliaments and, let us face it, the necessity of being able to say "no" when a matter of national vital interest really arises because, if you do not have the ability to say "no", then, frankly, it is all just a waste of time and it is just a talking shop. Let us get away from the generalities and could you be kind enough to answer that question. How do you manage to give back, quite rightly which you endorse and the Prime Minister appears to endorse, power to the National Parliaments in the context of qualified majority voting without enhancing that by the power of saying "no" when you really mean it?

(Peter Hain) I do think that National Parliaments should be given the right in some form - the Committee has put forward a very interesting proposal which we are looking at closely - to say "no" if any bit of legislation has integrated where it should not have done. I thought what was encouraging about the Laeken Declaration was that, for the first time, it considered the option of reversing the flow of decision making to the centre and said that we could consider repatriating powers to nation states. So, that was a major achievement. I would see National Parliament as having solved policing powers and subsidiarity. The real difficulty of COSAC, for example, in its present form, which, to be perfectly frank, I suppose you could build on, is that the European Parliament is represented there. European Parliament is a vested interest as is the European Commission and as is the Council of Ministers. You could have them making their representations to any subsidiarity body of national parliamentarians, but I do not think you can have them actually making decisions.

Mr Connarty

On that very theme, we note that there was a three day study visit seminar organised by the EPP Members of the Convention. One of the things we felt very strongly about when they came back and they held a press conference to tell everyone was in fact that any subsidiarity question should go to the Court of Justice. You will have seen in our report that we take the view that any subsidiarity question should be referred to a political body, it is quite clearly a political matter rather than a matter for the Court of Justice. Do the Government concur with our view or with the view taken by the EPP?

(Peter Hain) We concur very strongly with your view. That is the position I have argued in the subsidiarity working group. These are not decisions that should be made by lawyers, they are decisions that should be made by accountable elected representatives of National Parliament.

Mr Steen

You may have covered this point because I came in after you started. You used the phrase "the British position" in answer to a question. Is there a simple statement about the British position or is it more complicated? If it is simple, can you tell us. If it is complicated, perhaps not.

(Peter Hain) It depends to which issue you are referring. The British position broadly is that we want to see a Europe more closely connected to its citizens through National Parliaments in respect of subsidiarity policing and governments making key strategic decisions through the Council of Ministers reporting back to Parliament and being more transparent in the way they make their decisions. That is the British position. At the same time, I want a strong Commission. I do not want a weak Commission because a weak Commission would not have the determination to act against France for flouting the lifting of the beef ban, for example. In many repects, you could point to cases in recent years where the Commission has not been as strong as it should be in terms of enforcing the rules objectively and impartially. So, we do not want a weak Commission but we do not want a Commission either, together with the European Parliament, which is accreting all the power to themselves when actually the real accountability that I think people are looking for is their own ministers going to make decisions, being seen to make decisions and not doing so in secret, and then being accountable for those decisions to their parliaments and their publics. That is our vision and that is our position in a nutshell.

Roger Casale

I am delighted to hear that there is a convergence between the Government's view and the view of this Committee about some of the big strategic issues relating to the future of Europe and I am sure that is because we both want to see a Europe that is much stronger in the future and a European Union that is much stronger, that is to say more effective in terms of the outputs, more democratic in terms of the inputs and more accountable to the citizen. However, I wonder if the Minister would go further and recognise that there is also not a convergence but a real complementarity between, for example, what the Government are putting forward in relation to reports of the Council of Ministers and what this Committee is putting forward in relation to enhancing the role of National Parliament because, if we have a European Union in the future where the role of governance, through the Council of Ministers, is greater, then unless we have an enhanced role for the National Parliaments, the so-called democratic deficit will increase because the line of accountability for Government Ministers lies through National Parliaments and, while nobody on this Committee, as far as I know, is seeking to take away powers from the European Parliament, I think we must recognise that in relation to holding individual Government Ministers to account, it is National Parliaments that have the primary role.

(Peter Hain) I think that is absolutely right. We want to see a much stronger and more effective Council of Ministers with the European Council at its head which operates more strategically and has more of a political grip on the European Union and provides that focus and that political direction and that is why we have put forward a whole series of reforms. I was delighted to see that the Committee's thinking is very much in line with ours in terms of proper leadership, in terms of the President of the Council and an end to the rotating presidency system and so on. However, as you say, the other side of that coin is accountability back through National Parliament.

Chairman: We may come back to more questions on the Convention but I want to now come on to asylum and immigration.

Jim Dobbin

Cross border patrol and migration of people is really very high on the agenda. Illegal immigration and the development of common policies and also attempts to improve the management of borders where agreements and criteria have been set. Can you give us some examples of the kind of measures and positions that the Council envisages taking against countries which do not co-operate in the joint management of migration flows.

(Peter Hain) First of all, what we did not decide and what the British Government never intended should be the case is that there should be sanctions applied to punish poor countries. That story was hyped up before the Civil Council and was never really part of our objectives. It would be pretty absurd to try and do that. What we agreed was that the European Union should be able to review its relationship with countries which failed to co-operate in respecting their international obligations to re-admit migrants who have been smuggled illegally. That is a question of international obligations. It is really a question of saying to countries in the process of that review, "Look, we have a relationship as Europe with you with a lot of development assistance and trade opportunities that benefit both Europe and the country concerned and we expect you to, for example, pursue standards of good governance and, in this instance, to accept you into national obligations of accepting returns of illegal migrants."

Chairman: We will now turn to the reform of the Council.

Mr Cash

At the Council, I and many others think very disappointingly, was the agreement that Council debates would be public but would be confined to the co-decision procedure and indeed, even worse than that, it would only be during the initial stage of the procedure and at the end. Quite frankly, Minister, if you applied that to the British Parliament, which after all is a legislative body as indeed is the Council in this context, how on earth would you be able to justify it? I am not saying that this is your personal responsibility because you may disagree with it, but how on earth did it come about that the opening of Council meetings to the public when legislating was restricted to co-decision, and indeed the corollary to that is, what is the justification for it now that the principle that the Council legislates in public has indeed been conceded?

(Peter Hain) I agree with you. I think there should be full transparency. Where the Council is legislating, where governments are declaring national positions and when they are speaking to those positions, not when they are negotiating ... The sensitivity at Seville was where we did not get completely what we wanted but we did get, as you say, openness on dossiers and legislation on dossiers subject to co-decision and that was a big step forward because that has never been achieved and we ought to welcome that, but we wanted to go the full hog, subject to the necessary restriction of excluding the negotiations because you simply would not get real negotiations, they would take place in a corridor outside or, as in the Euro United Security Council, what happens is that there is a separate room alongside where the really hard negotiation is done in private. So, I am sure you would accept that proviso. I do not think you can defend the situation any more whereby the Council and the Council of Ministers are not transparent. One of the problems of the disconnection between the citizen and the institutions of Europe is that there is not transparency and accountability. People do not know how decisions are made. Issues develop into a morass of EU decision making and the process is not -

Could I perhaps offer a thought on that which is that nobody expects meetings of the Cabinet to be held in public because that is all part of the position which is adopted before it is put into the constitutional context where accountability applies and it is at that point that you have to have the transparency so that those who would seek to call people to account have a template against which to ask the right questions.

(Peter Hain) I agree with you which is why I said I agreed with you, but I would just make this distinction. You mentioned the British Cabinet and you quite rightly said that nobody would expect that to operate in anything other than private. We are talking not about a Government of Europe, we are talking about an inter-governmental process and that is a very different position.

I think we might disagree about a lot of that.

(Peter Hain) I do not suppose you are favouring a Government of Europe any more than I am. We are talking about an inter-governmental process. In that inter-governmental process where Ministers or, in the case of the European Council, Heads of Government arrive for a limited period, a day or a day-and-a-half, to negotiate big issues, you have to negotiate, although there is a lot of preparation done, and legislate and declare positions. That is not the same as having a weekly Cabinet meeting and then reporting to parliaments. It is a different system. I think there have to be variations which is why it cannot be transparent 100 per cent of the time, but it should by fully transparent, as I say, when it is legislating -

So you are going to continue to press for this.

(Peter Hain) We are and I have already pressed for it in the context of the Convention on the Future of Europe and we are determined to press it fully and I think we will have a lot of support in doing so.

What about a Hansard report in order that we can actually read it as well as hear the reports if someone is good enough to come along and tell us?

(Peter Hain) I do not see a problem with that in principle. It sounds like a remarkably sensible idea, if I may say so.

Mr Hendrick

It is concerning me that the Minister is agreeing greatly with Mr Cash! We have talked about inter-governmental and so on and repatriation of powers. Which powers do you think should be repatriated?

(Peter Hain) I think what we need to do is first of all make sure that we do not get the continued 'competence creep' that we have seen. At the moment, we will consider powers of themselves. I think the principle of repatriated powers is the important thing. At the present time, there are no powers for repatriation at the top of my agenda though, if the Committee suggested any, I would happily look at them. What I would like us to do is not go into a straightjacket where you have a catalogue of competences which means that you can never have flexibility. For example, if you had asked me a year ago at a hearing like this whether I would have agreed with a lot of justice and home affairs measures being put effectively into the first pillar subject to common policy and communitisation and so on, I would have said "no", but in the aftermath of the terrorist attack and some of things we had to do to get a common arrest warrant and so on, it has actually been a very sensible way to go, asylum policy being another example. I think we have to evolve and learn but I think we also have, in drawing up a new dispensation for Europe's constitutional arrangements, to be very clear as to what is a national policy and what is a European policy.

I agree with what you are saying, that there needs to be some flexibility, for example to move things into the first pillar, but that is moving things -

(Peter Hain) That are already in European competence?

Yes, in that direction. What I am talking about is powers and competencies which currently exist. If you do not mind me saying, I do not think saying that we are for it in principle and not having in mind any specific examples is a tenable position. What powers would you like to see repatriated? Putting forward a principle without any rationale behind that principle or any example of where that principle would benefit people is not a beneficial proposition. What examples could you give the Committee?

(Peter Hain) As I say, what is important is the power that exists there to do it rather than drawing up a list. I have not seen a list which I would be particularly impressed by saying what should be repatriated. I would perhaps make a related point and that is that the European Union often legislates with a pretty heavy hand and we are arguing that it should pursue policies with a lighter touch. It does not always need an all-embracing directive straitjacket or regulation straitjacket. It could be, as we have seen on the Lisbon reform agenda, for example, co-ordination of policy rather than legislating in a very restrictive way, and maybe legislating on set principles and leaving it to nation states as to how they implement those.

These are treaties that have been agreed and these are powers that the European Member States have signed up to. Are you saying now that you want to unravel that process?

(Peter Hain) You are asking me on the one hand do I want to repatriate any of those powers.

Yes; that is unravelling it.

(Peter Hain) I have said that I want the power to do so should the necessity arise, but if you are asking me do I have in mind any specific examples, no, I do not at the present time. What is important is to establish the principle that you can do so if the situation changes and you decide that is where you want to go.

Mr Connarty

Perhaps I could suggest in fact that the mess we are getting ourselves into on food supplements and herbal medicines at the moment area is a very good example where a directive is coming from the EU and we are making a right mess of it in this particular government at this time.

(Peter Hain) I could not possibly comment as a member of the Government.

Chairman

That was a preamble.

(Peter Hain) But I know what you are saying.

Mr Connarty

The Seville European Council also agreed that there should be "a multiannual strategic programme" for the three following years and "an annual operating programme of Council activities", which we would welcome and we would like to have prior knowledge of what is likely to be coming up. Will the European Council's three-year strategic programmes and annual operating programmes be available for this Committee and others to comment on before they are agreed, so as to avoid a wholly top-down, centre-out approach?

(Peter Hain) That seems to me to be a good idea. I will happily look at that. That is not something I have specifically considered but I would like to look at that. On the face of it, as I say, it is a good idea, Chairman.

Chairman

But will it happen?

(Peter Hain) We will try and make sure that happens.

Mr Connarty

I think, Chairman, it is in line with the things we are suggesting in our own report, that there should be more and wider discussions. We do not want to end up as we are at the moment with industry coming to us as individual members and saying,"Where did this come from?", when we could have seen three years before exactly where it was coming from if we had a programme.

(Peter Hain) Yes. If we could integrate the Commission's programming better with the Council's programme and then have a process of direct accountability prior to and after initiatives on legislation, that would be a good idea.

Jim Dobbin

We will have a new configuration if the Development Council is to disappear. If the General Affairs and External Relations Council were to cover that issue on development co-operation, do you not think there is a danger that the wider foreign policy interests will dominate and perhaps marginalise the focus of development co-operation?

(Peter Hain) I do not think so because at the European level it is part of the same foreign policy agenda. If you think, for example, of what we are trying to do in the Balkans, or for that matter what is going on in Afghanistan, there is as it were the hard end on foreign policy which could involve military action, peacekeeping, and then there is a softer end but equally, if not more important, is the development assistance programme. Integrating them under a common external relations umbrella actually helps to get a more coherent joined-up foreign policy position for the European Union. That is not to say it would be entirely determined by foreign ministers. Clearly, if there were development issues then the Secretary of State for Development and other development ministers in other Member States would be party to those negotiations and present.

Angela Watkinson

My question is about the opportunity for formal scrutiny of reports going to the European Council. Presidencies frequently produce reports, such as progress reports on European Security and Defence Policy, too late for formal scrutiny for the European Council to which they are presented. Do you expect that better organised preparation before European Councils will assist more effective scrutiny or will papers such as the Presidency progress reports on the ESDP still emerge only at the last minute?

(Peter Hain) I share your concern about this and it is precisely because we want Councils to be better organised that we pressed very hard for the reforms we got from Seville so that things do not just appear at the last minute or are added on by the Presidency almost like pulling rabbits out of a hat from time to time, or it seems rather like that, but that there is a coherent programme in which there can be room for the accountabilities which you refer to, and the whole thing has a much more long term strategic focus instead of a haphazard one.

Are you optimistic that this is going to happen?

(Peter Hain) I think the fact that those Seville conclusions were agreed unanimously means that everybody understands that we cannot continue as we are. It is not working in 15, let alone what it would be like in 25 or 27 or 28. These reforms have come not before time.

Roger Casale

I think we do have to work together in this to make the process of scrutiny really effective and I think your presence again before this Committee today and your willingness to come before the Committee underlines your commitment to that, but on the day when the Prime Minister has come before the Liaison Committee, which has set a real precedent in terms of accountability of Government to this House, in the future if the Government is successful in negotiating the kind of reforms to the Council of Ministers that we have been discussing what commitments could you give to taking steps from the Government side which would allow for greater scrutiny and greater accountability to this House?

(Peter Hain) I would happily look at any proposals you put forward, and you have put forward a number of proposals with which we agree.

Chairman

The Presidency report, Measures to prepare the Council for Enlargement, says that "some delegations" wanted the Council to be able, in certain exceptional circumstances, to have dossiers referred to it for a political decision, including a decision by a qualified majority if that is what the Treaty stipulates. "Other delegations" were opposed to this in principle, stressing the risk of the European Council being transformed into an appeal body for the Council. What was the Government's position on dossiers being referred to the European Council for a political decision by a qualified majority if qualified majority is what the Treaty stipulates?

(Peter Hain) What we really wanted, Chairman, was a situation where, if a subject had been agreed by QMV in the lower Council formation, then if it was re-visited at the European Council level QMV would have to operate there, because effectively what you see is a series of vetoes exerted. The Common Agricultural Policy is an example of that where having qualified majority voting on the Common Agricultural Policy would actually be a big advantage. We did not quite get there. What it said was that it would be brought to the attention of the Council so that they could consider the implications for subsequent proceedings. What we will still push for is that principle.

What impact do you expect the middle way, of allowing the European Council to take stock of current positions, to have?

(Peter Hain) It is part of the preparation and pre-negotiation with more limited agendas. Some of the Council agendas just elongate almost by the day in the run-up to the Council meetings but with the more limited agenda, focusing on the big issues, with the new General Affairs Council underneath, an internal council as it were, meeting more regularly, managing the European Union more effectively, preparing for the European Council more efficiently, you should get to a situation where the really big decisions are made by heads of government and a lot of those earlier decisions are dealt with at a lower level. I think that would help overcome the problem to which you are referring.

Is this compromise likely to impede reform of the Common Agricultural Policy?

(Peter Hain) You mean the compromise agreed at Seville?

Yes.

(Peter Hain) No, I do not think so. In fact, it will encourage it. It just has not gone the full way which would have secured it.

Mr Connarty

We have recently had a session with your fellow Minister, Lord Filkin, on what seemed to be threats to some of the fundamental principles of the European Charter of Human Rights. We also have the ongoing discussion about the European Charter of Fundamental Rights which seems to add to ECHR a catalogue of social and economic rights, so there are still some questions to be answered. Would the proposed incorporation of the Charter of Fundamental Rights into a Constitutional Treaty for the EU cause the European Court of Justice and the European Court of Human Rights to have parallel and therefore potentially conflicting competences over human rights issues? What is the Government's attitude towards the proposed incorporation of the Charter into the Treaty and what is the Government's view on the alternative suggestion of the EU's accession to the European Convention on Human Rights?

(Peter Hain) We are willing to look at the accession to the Convention on Human Rights in a sensible and sympathetic fashion provided we see exactly what it means. I think the problem with the incorporation of the Charter of Fundamental Rights as it is presently constituted, just wholesale into the Treaty, is that it could - in fact would in our view - start to influence domestic law in a way that was never intended. In that form it is completely unacceptable to us and we have been working very hard to draw the attention of Member States to the implications not just for us with our common law based system, because we are particularly vulnerable, but also to other Member States' system of law. To be frank, Chairman, the fundamental rights are seen as a motherhood and apple pie document by a lot of Member States and people say, "How can you possibly object to this?", and, when you read it, it is a very fine declaration of human rights and so on. However, they have not really looked beyond that and considered what the implications are. I have pointed out, for example, to German delegates at the Convention that their ban on essential workers having the right to strike - there is a ban on those essential workers in the German constitution having the right to strike - could be overridden, in fact probably would be overridden, by wholesale incorporation, unamended, of the Treaty without the horizontal articles preventing that happening being strengthened and stiffened. They were really quite amazed at this, so we are doing some fairly heavy lifting to try and get a more intelligent debate about that at the present time but ultimately it is not acceptable to us. We do not mind incorporation in some form with those necessary safeguards built in but not wholesale incorporation, which is just not acceptable.

Chairman

Minister, has there been much progress in relation to the possible simplification of the EU and EC treaties at the Convention so far, and is there much support for their fusion into one Treaty with a single legal personality for the EU?

(Peter Hain) There is a consensus that we need to simplify the Treaties in some form. We very much support that point of view. There are two broad alternatives for doing that. The one that I suppose is symbolised by the text produced by the Florence European Institute is a wholesale re-structuring of the Treaties and simplification into what would amount to an entirely new text of the Treaty. We do not want to go down that road because it will put up for grabs virtually everything that has been painstakingly negotiated in the past, or there is the second alternative, which is a bolt-on-the-front option, if I can put it in that fashion, of a new statement of constitutional principles: what the European Union is about, where the limits on its competences are, what is reserved to a national level, what operates at a European level, how it is organised and, to the extent that the existing Treaties are amended, for example, by ending the six-monthly rotating Presidency system, as we and your Committee favour, then you would amend the Treaty article concerned in that new statement, that bolt on the front. Those are the two options and we are exploring support for the second of those options which is the one we favour.

Mr Cash

Forgive me for saying this but I have been addressing this question over the last 12 years.

(Peter Hain) Rather longer than I have.

I first met Mr Ehrlemann(?) In 1986 or 1987 and we talked about this, so you can imagine how long the Florence Institute and its inspiration have been working on this, because they have it as an objective to create a constitutional arrangement, whether it is by way of a treaty or a specific constitution, and I will leave it at this, that I actually find it extremely dangerous, once you get into that arena, because it then acquires many of the characteristics of - wait for the dreadful word - an autochthonous constitution, which means that it grows from its own roots, and this is a rather dangerous position to be in, but it is related to the next question I would like to raise, and that is the question of the personality because the two run together. The problem is this, that if you have a legal personality, as I think you may concede we already appear to have with regard to trade, but you apply it to the Union as a whole, which is what some of the Member States and members of the Convention would want, you then get into a position in international law which, combined with the movement towards a constitutional arrangement of the kind we have discussed, does move us down the route which, for all the fine words about returning power to the national parliaments and all the rest of it, actually puts us in a very parlous condition and I would not like to accuse anybody of a sleight of hand but actually this is very much what is going on. I do not want to elaborate this other than to ask you whether the Government itself has emphatically come to the conclusion that a single legal personality would be utterly at odds with what the Government itself and you yourself today have declared, for example, with regard to national parliaments and at the bottom line, if I may say, Minister, in a very urgent sense, the only means of preserving genuine democracy and legitimacy and accountability for the citizens of Europe, including in particular the United Kingdom. I regard this as a hugely important question. Could you please say that you are not going to agree to a legal personality?

(Peter Hain) We are not inclined to.

Inclined?

(Peter Hain) Let me finish. The European Community already has a legal personality through - and I am sure you are familiar with every word - Article 281 of the Treaty of the European Communities, but the European Union does not have.

That is the point.

(Peter Hain) Although there is an issue as to what, if it operates as you implied, in an international context, its actual personality is. I think we should look at this with an open mind but with a very wary eye as well in order to see exactly what the agenda is. Lord MacLellan is on the working group that is looking at this.

Robert MacLellan who used to be in this House?

(Peter Hain) That is right.

With his views on this subject I am afraid I would not be entirely enthusiastic about the outcome.

(Peter Hain) Perhaps you might take that up with him. Remember, there is a British Government position and then there is a position which may or may not be adopted by national parliamentarians.

Your position is that you are wary and inclined but you are not going to rule it out?

(Peter Hain) We are inclined to look at it just to see what it means.

You have got the most brilliant lawyers in the Foreign Office who would be able to advise you on what a legal personality means. I might even dare to presume to tell you myself.

(Peter Hain) Chairman, since Bill has invited my brilliant diplomat sitting next to me to advise the Committee, perhaps he would.

(Mr Baird) We want to look at exactly what the consequences of a full legal personality in the Union would be and how you could draft to limit the consequences of that within the intergovernmental pillars. The fact is of course that at the moment in the CFSP Pillar and, by consequence, in the JHA Pillar, you have a power to enter into agreements, which is a limited form, but the question is what would be the difference if we moved from that limited form. We want to look at these issues and they are very complex legal issues.

Chairman: I am sure it is very interesting for the constitutional lawyers. One last point.

Mr Cash

It is simply this, that, as with the question of trade, when you deal with the United States the European Union speaks there with one voice and that is the final negotiator in respect of these extraordinarily important matters. This moves, if you apply the legal personality to the European Union, away from intergovernmentalism into the whole of common and foreign security policy etc as being spoken to by the European Union with one voice. I do not need to elaborate any more. It is extremely significant if you go that way, and I of course would fight it all down the line.

Roger Casale

Chairman, I have always understood everything that Mr Cash has said to be premised on the idea that the European Union has a legal personality already and therefore to admit that it has not rather undermines many of the points that were made previously. Could I just ask the Minister to say that in assessing this with a weary eye - with a wary eye -----

(Peter Hain) Sometimes weary as well.

Sometimes weary, always wary eye, -----

(Peter Hain) You spend a week in Brussels on these matters and you get a bit weary.

----- will he say that the criterion that he would apply to that would be a pragmatic one, looking at what is best in terms of Britain's long term interest and, just as we have already this legal personality in relation to trade does mean that in Britain's economic interests we have that powerful voice in relation to world trade matters, there may on an ad hoc basis be other instances where that legal personality is desirable too? Will he confirm that he will proceed on a pragmatic basis and not just on the basis of deciding in advance, as Mr Cash is suggesting he does, but actually looking at each case on its merits?

(Peter Hain) Yes, subject to some pretty powerful constraints. I cannot see it applying in common foreign security policy, for example. That is one instance where that would not occur.

Chairman

Minister, thank you very much. It has been a very interesting session. I had a thought during the discussions today that you may be reaching the term of your office when you will be one of the longest serving European ministers because the tenure of previous European ministers has not been so long, so it is nice to see you keeping up the good work and I would like to thank you very much for coming along. I was particularly impressed by Mr Cash's recommendation of our report to you. He wrote a minority report and he put down 153 amendments and still thought it was an excellent report. Thank you very much for coming along, Minister.

(Peter Hain) Thank you, Chairman. Could I say that your reminding me that I am about to exceed the longest serving minister makes me a little concerned. I hope to be here for a while yet.